New Delhi, Oct 17 India’s commercial real estate market saw a major upswing in Q3 CY25, with office leasing continuing to exceed supply for the sixth straight quarter, a report said on Friday.
Net leasing increased 31 per cent year-on-year to 15.9 million sq. ft in Q3CY25, while completions rose 44 per cent YoY to 13.6 million sq. ft, resulting in a vacancy rate of 14.2 per cent, a dip of 240 basis points from the previous year and a 60 basis point drop from the previous quarter, said the report from Nuvama Institutional Equities.
Nuvama forecasted completions of 50–54 million sq. ft. annually in CY25–26, though some projects could be deferred. Vacancy levels are likely to decline modestly over the medium term, with annual rental growth expected to accelerate, the report said.
Gross leasing rose 5 per cent sequentially to 22.3 million sq. ft., marking the eighth consecutive quarter with absorption at or above 20 million sq. ft. Rents rose in all major cities, indicating growing pricing power for developers and landlords.
Bengaluru maintained the lowest vacancy level at 9.2 per cent, while Hyderabad continued to record the highest at 22 per cent. The Mumbai Metropolitan Region (MMR) saw vacancies fall to 10.6 per cent — the lowest since 2015. The NCR region’s reported its lowest vacancy rate since 2012 at 20.2 per cent.
The technology sector represented 31 per cent of leasing, dominated leasing activity with a 31 per cent share, followed by global capability centres (GCCs), which contributed 38 per cent of gross leasing during the quarter. Bengaluru was the leader in GCC activity, accounting for around 38 per cent of transactions. While domestic occupiers’ share fell slightly to 46 per cent in Q3 from 52 per cent in Q2, demand from multinational and global capability centres remained robust.
The brokerage believes financially strong developers are consolidating their market position as weaker players lose share. Developers with large rental portfolios are best positioned to benefit from this healthy office space demand, said Nuvama Institutional equities.
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